Business Successes of Malaysian Housing Developers

Business Successes of Malaysian Housing Developers

Mastura Jaafar (Universiti Sains Malaysia, Malaysia), Azlan Raofuddin Nuruddin (Universiti Sains Malaysia, Malaysia) and Syed Putra Syed Abu Bakar (Universiti Sains Malaysia, Malaysia)
Copyright: © 2014 |Pages: 11
DOI: 10.4018/978-1-4666-5202-6.ch038
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Introduction

Despite various problems and challenges since Malaysia achieved its independence, the progress of the housing industry is rather overwhelming. Malaysia as a developing country has gained benefits from the development in the housing industry from the spill-over of employment opportunities and the substantial increase of sub-stream industries. Housing provision in Malaysia is carried out by both the public (i.e. government agencies) and the private sector with the latter touted as the main actor in the housing sector in Malaysia (Salleh, 2008).

A housing developer is an entrepreneur who initiates housing development (Maruani & Amit-Cohen, 2011). The governing law that controls the housing industry in Malaysia is the Housing Development Act (Control and Licensing) 1966 Act 118 (Amendment 2007) which defines a housing developer as:

Any person, body of persons, company, firm or society (by whatever name described), who or which engages in or carries on or undertakes or causes to be undertaken a housing development.

Housing developers must obtain a license from the Ministry of Housing and Local Government (MHLG) (Ameer, 2007) and are usually registered as members of the Real Estate and Housing Developers’ Association (REHDA) of Malaysia (Jaafar & Ali, 2011).

It is fair assumption that housing developers are at the top of the supply chain and are the ones providing jobs to other professions such as consultants, material suppliers, and building contractors, among others. These developers contribute significantly to the physical outlook, economy and social aspects of certain localities. For major developments, developers have to operate within a regulatory framework of the local statutory system (Figure 1). Each development involves three parties: the public, the developer, and the planning authority.

Figure 1.

The development decision model

Source: Maruani and Amit-Cohen (2011)

The basic tasks of housing developers in undertaking a housing development project are the followings:

  • 1.

    To acquire land for development

  • 2.

    To prepare land for development (includes land conversion and subdivision and building plan approval)

  • 3.

    To secure the required Development Licenses from the Ministry

  • 4.

    To develop the land according to approved plans

  • 5.

    To sell the houses to prospective buyers

  • 6.

    To acquire a Certificate of Fitness for the project for handing over

The steps engaged are subject to the approval of government agencies. The present government looks to work bilaterally in upholding the privileges of the housing developers and homebuyers respectively (Tan, 2011) in order to ensure growth of the industry.

Residential development is unique in terms of characteristics portrayed from the initial process until the delivery stage. Against the background of a strong economic climate, healthy competition among housing developers in Malaysia is quite evident, seen in the context of industry players being forced to think outside the box, instituting innovative products and ensuring new adaptive and flexible strategies. This keen rivalry however, has forced many new entrants to exit from this risky business, seemingly unable to compete with the traditional players ensconced within the industry. Hence, the research attempts to retrieve factors that drive successful housing developers in Malaysia towards superior performance and subsequently diminish the rate of failures among the actors of the housing development industry.

Key Terms in this Chapter

Content Analysis: A set of procedures which are developed to understand and interpret textual material for better insights and knowledge.

Qualitative: The adopted research method that is exploratory in order to assess and observe the behavior of the respondents.

Housing Industry: One part of the construction sector that provides residences for the public interest (usually entails houses for sale).

Competitive advantage: The capacity of an organization to outperform other rivals by producing defensible position.

Housing Development: The act on the provision of money to erect residential houses with the compliance of certain rules and act.

Housing Developer: The main coordinator responsible for constructing houses for profit-making purposes.

Success: The ability of an organization to be effective and achieve its own goal and mission towards superior performance.

Business: An activity of buy and sell that undergoes certain way of trading rules implemented by company or firm to gain profit.

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